The US government announced new, suspended tariffs on Wednesday against six countries in response to those governments’ digital services taxes, the office of the US Trade Representative said.
The six countries subject to the tariffs, which are set at 25% on about $2 billion worth of goods, include Austria, India, Italy, Spain, Turkey, and the United Kingdom. The additional duties will be prevented from taking effect for up to 180 days while the US continues negotiating on a proposed global tax regime through the Organization for Economic Co-operation and Development and the G20 process, USTR said.
Foreign governments have long complained that large tech companies such as Apple, Facebook, and Google should pay them more in taxes. Some have recently passed taxes specifically targeting revenue generated by such companies, including those based in the US such as Facebook, Google, and Amazon.
The United Kingdom, for example, has imposed a 2% tax on the revenues of social media platforms, search engines, and online marketplaces, arguing that because those companies profit from UK-based users, the UK deserves a share of those gains.
“The application of the current corporate tax rules to businesses operating in the digital economy has led to a misalignment between the place where profits are taxed and the place where value is created,” the UK government has said.
The US’s response to the digital services taxes reflects its opposition to what it views as discriminatory policies targeting large, successful Silicon Valley companies with a global reach. In March, USTR proposed an estimated $880 million in combined new tariffs against the six countries, amid an investigation of the foreign taxes under Section 301 of the Trade Act of 1974.
The final tariff figure affecting more than $2 billion of goods covers imported products including shrimp, carpets, cosmetic items, clothing, and video game consoles, among other things.
“The United States remains committed to reaching a consensus on international tax issues through the OECD and G20 processes,” said US Trade Representative Katherine Tai in a statement. “Today’s actions provide time for those negotiations to continue to make progress while maintaining the option of imposing tariffs under Section 301 if warranted in the future”.